• Canadian Taxpayers Federation

Newfoundland and Labrador bailout must come with spending cuts

  • Feds giving $5.2-billion bailout to Newfoundland and Labrador

  • Newfoundland and Labrador has highest per person program spending among provinces

OTTAWA, ON: The Canadian Taxpayers Federation is calling on the federal government to push the government of Newfoundland and Labrador to reduce its spending in the wake of Ottawa’s multi-billion- dollar bailout of the province and its Muskrat Falls hydro project.

“This means all Canadian taxpayers are now responsible for the bad decisions made by big-spending politicians in Newfoundland and Labrador," said Franco Terrazzano, Federal Director for the CTF. “Not only is this bailout a huge cost for Canadian taxpayers, but there aren’t any strings attached to force the province to save money.

“This bailout won’t solve all of Newfoundland and Labrador’s problems, so it’s imperative for the province to find savings so we don’t see a second or a third bailout.”

Prime Minister Justin Trudeau announced today that Ottawa will spend $2 billion bailing-out Newfoundland and Labrador’s Muskrat Falls hydroelectric project. A further $3.2 billion will be transferred to the government of Newfoundland and Labrador through proceeds from the federal government’s stake in the Hibernia offshore project.

Newfoundland and Labrador’s own recent economic recovery report opposed a federal bailout.

“A federal bailout is not the answer,” reads the report. “A bailout, and all that it implies, will have a negative long-term impact.”

Newfoundland and Labrador has the highest per-person program spending of all provinces. If Newfoundland and Labrador brought its spending in line with other provinces, its taxpayers would save more than $1 billion annually.

The CTF is warning that the bailout for Newfoundland and Labrador sets a bad precedent for other provinces who may be looking for a taxpayer bailout. With $400 billion of debt, Ontario is the most indebted subnational government in the world. The Alberta government has recently received a credit downgrade, and its Sturgeon Refinery has long-plagued taxpayers.

The federal government is currently more than $1 trillion in debt. Data from the Parliamentary Budget Officer shows that the feds won’t balance the budget until 2070 under the status quo.

“Other provinces have boondoggle projects as well, so this sets a bad precedent for the big spending politicians across Canada,” said Terrazzano. “We need provincial balanced budget legislation to make sure all Canadians are not on the hook for every provincial politician’s pipe dreams.

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